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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The price of a good measured in units of currency






2. MUx / Px = MUy/Py or MUx/MUy = Px/Py






3. Models where firms are competitive rivals seeking to gain at the expense of their rivals






4. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






5. Costs that change with the level of output. If output is zero - so are TVCs.






6. Ed < 1






7. All firms maximize profit by producing where MR = MC






8. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






9. Entry of new firms shifts the cost curves for all firms upward






10. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






11. Demand for a resource like labor is derived from the demand for the goods produced by the resource






12. The practice of selling essentially the same good to different groups of consumers at different prices






13. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






14. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






15. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






16. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






17. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






18. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






19. The imbalance between limited productive resources and unlimited human wants






20. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






21. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






22. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






23. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






24. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






25. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






26. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






27. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






28. A good for which higher income decreases demand






29. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






30. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






31. The additional benefit received from the consumption of the next unit of a good or service






32. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






33. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






34. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






35. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






36. Exists if a producer can produce a good at lower opportunity cost than all other producers






37. The additional cost incurred from the consumption of the next unit of a good or a service






38. Total product divided by labor employed. APL = TPL/L






39. Two goods are consumer substitutes if they provide essentially the same utility to consumers






40. The most desirable alternative given up as the result of a decision






41. Occurs when LRAC is constant over a variety of plant sizes






42. TR = P * Qd






43. The total quantity - or total output of a good produced at each quantity of labor employed






44. Ed = 0 - no response to price change






45. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






46. The output where ATC is minimized and economic profit is zero






47. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






48. ATC = TC/Q = AFC + AVC






49. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






50. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good